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contractbreach of contractprecedent
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Exxon Corp. v. Crosby-Mississippi Resources, Ltd., 40 F.3d 1474, 130 Oil & Gas Rep. 572, 25 UCC Rep.Serv.2d 1103

Facts

In 1985, Exxon and Crosby Mississippi Resources Limited (CMR) entered into a joint operating agreement for the operation of an oil well. Exxon billed CMR for its share of the expenses, but CMR did not pay, leading Exxon to file suit to recover the owed amounts. CMR contested the validity of the bills, claiming they were not received for certain months and that the billing procedures violated Mississippi law. In a separate action, CMR sued Florida Gas Transmission Company for breach of contract regarding a gas-purchase agreement, claiming underpayments.

In 1985, Exxon and Crosby Mississippi Resources Limited (CMR) entered into a joint operating agreement for the operation of an oil well.

Issue

Did the provision in the joint operating agreement that bills not disputed within 24 months be presumed correct violate Mississippi law, and did CMR waive its rights under the gas-purchase contract?

Did the provision in the joint operating agreement that bills not disputed within 24 months be presumed correct violate Mississippi law, and did CMR waive its rights under the gas-purchase contract?

Rule

The court determined that the provision in the joint operating agreement did not violate Mississippi law as it established conditions precedent for challenging billing statements, and that CMR waived enforcement of the gas-purchase contract's floor-pricing provision.

The court determined that the provision in the joint operating agreement did not violate Mississippi law as it established conditions precedent for challenging billing statements, and that CMR waived enforcement of the gas-purchase contract's floor-pricing provision.

Analysis

The court found that the conclusive presumption in the joint operating agreement was valid and did not violate Mississippi law, as it merely set conditions for disputing bills. CMR's failure to provide written exceptions within the specified time frame meant that the bills were presumed correct. Additionally, the court ruled that CMR's conduct over several years constituted a waiver of the floor price in the gas-purchase contract.

The court found that the conclusive presumption in the joint operating agreement was valid and did not violate Mississippi law, as it merely set conditions for disputing bills.

Conclusion

The court affirmed the district court's ruling in part, allowing Exxon to recover amounts owed under the joint operating agreement, but reversed in part regarding the interest calculations. CMR was found to have waived its rights under the gas-purchase contract.

The court affirmed the district court's ruling in part, allowing Exxon to recover amounts owed under the joint operating agreement, but reversed in part regarding the interest calculations.

Who won?

Exxon prevailed in the case, as the court upheld the validity of the billing procedures and found that CMR had not properly disputed the charges within the required timeframe.

Exxon prevailed in the case, as the court upheld the validity of the billing procedures and found that CMR had not properly disputed the charges within the required timeframe.

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